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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 2: Claudia Sam, yesterday in front of sixteen hundred people at

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Speaker 2: the Marriott Marquis, we had a fantastic panel and they

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Speaker 2: mentioned Claudia Sam. She is definitive on rational analysis of

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Speaker 2: the American labor market out of Michigan Chief Economists, News

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Speaker 2: Centery Advisors joining us.

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Speaker 3: Now, Claudia, you write that the.

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Speaker 2: Some rule triggers at four and a half percent. How

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Speaker 2: distant are we from a four and a half percent

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Speaker 2: unemployment rate?

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Speaker 4: So I think we're unths away from seeing that unemployment rate.

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Speaker 4: It tends to take time for it to build. Unfortunately.

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Speaker 4: I think that is where we're headed here, so we

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Speaker 4: could see something like that in the second half of

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Speaker 4: the year.

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Speaker 5: Claudia, the question I think for a lot of folks

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Speaker 5: here when we look at this data here today on

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Speaker 5: the jobs, and it's not going to give as much

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Speaker 5: of a hint to the way employers are thinking about

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Speaker 5: the job market today post tariff discussion, But what will

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Speaker 5: you be looking at it?

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Speaker 4: Today's data, right, So you know today's data matters. This

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Speaker 4: employment report matters not because it tells us what's going

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Speaker 4: to be the effect of all the administration's policies, particularly

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Speaker 4: with the teriff policies that we learned about this week,

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Speaker 4: But it is a policy happens in a macroeconomic context.

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Speaker 4: We need this labor market to be as resilient and

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Speaker 4: strong as possible to help workers and households whether this

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Speaker 4: storm is coming. That was absolutely crucial. We in twenty

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Speaker 4: twenty two or twenty twenty three, we're economous. Many were

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Speaker 4: saying session is coming, recession is coming. We had some

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Speaker 4: big policy changes fed raising interest rates, Inflation was high.

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Speaker 4: We did not have a recession, and a key to

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Speaker 4: that was we had a very strong labor market that

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Speaker 4: buffered it. So it's really important this context going in

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Speaker 4: even if the policy effects aren't there today.

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Speaker 2: Clauda Danny blanche Flower up at Dartmouth's just mentioned your

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Speaker 2: name in awe over the Michigan approach to listening to

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Speaker 2: non experts to the Michigan conference numbers.

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Speaker 3: In all that his.

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Speaker 2: President Trump broken the labor and investment confidence of America.

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Speaker 4: Well, and I will say Danny's done excellent work using

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Speaker 4: those expectations surveys, but Michigan survey the conference board to

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Speaker 4: really get a sense of is a recession coming? So

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Speaker 4: the song rule was a lot about is one here?

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Speaker 4: But he's done a lot of work on what is

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Speaker 4: one coming? And take those the sentiment surveys very seriously,

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Speaker 4: and it's ugly right now. We had an ugly period

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Speaker 4: a few years ago too where people were very downbeats.

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Speaker 4: But again we're back in place where people are telling

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Speaker 4: us and business is too. The outlook is pretty grim.

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Speaker 4: And that's even before I mean that's last month surveys, right,

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Speaker 4: that's not even this week's survey. So it's you. It

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Speaker 4: can be hard to interpret those data. Sometimes they can

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Speaker 4: lead us astray, and yet like there are real policy

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Speaker 4: tatas happening. And one thing with this little book Salt Data,

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Speaker 4: is you can look into the future and give us

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Speaker 4: that cuit.

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Speaker 3: You can.

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Speaker 2: Claudia, stay with us, please, We're going to go to

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Speaker 2: doctor Sam here after the data. Neil Dutta waiting on deck,

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Speaker 2: who's been brilliant again. Duta talking with Krugman. Professor Krugman

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Speaker 2: will join us next week at some point, Claudia, completely

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Speaker 2: unfair for you to go granually here on the jobs report.

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Speaker 3: We'll let Neil Dutta do that. But do you take

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Speaker 3: us three?

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Speaker 2: I mean, Jason Furman's go an ecumenical, honest with seven

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Speaker 2: moving averages.

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Speaker 3: What does Claudia Sam do?

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Speaker 2: Do you look at the two months, the three months

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Speaker 2: with revisions, the six month moving average, which matters to

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Speaker 2: you on non farm payrolls.

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Speaker 4: Right, well, you definitely don't want to focus on just

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Speaker 4: one month of data. Three month moving average is a

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Speaker 4: good place to start. I will say, though, I'm the

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Speaker 4: employment report in general, you just want to breathe it

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Speaker 4: all in, right, like, you need to look at this.

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Speaker 4: You know, the payrolls, this is good. That was a solid,

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Speaker 4: solid red even with the revision unemployment rate. We don't

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Speaker 4: like to see it taking up on utilization. So I'd

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Speaker 4: say this is kind of a mixed bag. That the

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Speaker 4: wage pressures aren't there, so at least we're not, you know,

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Speaker 4: pulling in another inflationary impulse here. So I think, you know,

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Speaker 4: generally this this looks a lot like what we've been

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Speaker 4: seeing from this labor market, which is it's in a

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Speaker 4: good place, but it's not it's not the like firing

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Speaker 4: on all cylinders that we would need to, you know,

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Speaker 4: go up against some of these shoes.

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Speaker 3: And Paul, you're going back and forth with jer own Powell.

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Speaker 3: I mean, this doesn't move the needle for the fat doesn't.

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Speaker 5: I'm not sure we'll see soon though. But Claudia here,

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Speaker 5: how do you think, maybe let's just say, how do

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Speaker 5: you think the labor market's going to evolve for the

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Speaker 5: remainder of the year, giving some of this uncertainty that

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Speaker 5: that's number brought into the accon outlook with all these tariffs.

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Speaker 4: Well, so I think the labor market is going to

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Speaker 4: get on a slowing trajectory. The thing is, it's one

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Speaker 4: of the it's one of the last places where this

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Speaker 4: shows up. We're going to see prices start to move

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Speaker 4: up pretty rapidly, and then you see consumers pull back,

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Speaker 4: and then you see you know, employers go from not

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Speaker 4: hiring as much to not as many hours, and then

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Speaker 4: they start laying off and then you know, it takes

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Speaker 4: time for this to move for a shock like this

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Speaker 4: like these tariffs, to move their way through the economy,

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Speaker 4: and if if you wait until it shows up in

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Speaker 4: the higher unemployment rate to do something, they like to said,

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Speaker 4: you waited until we're passed. So I think that's you

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Speaker 4: don't want to look here first the labor market, but

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Speaker 4: the trajectory is not encouraging the policy.

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Speaker 2: Changes, Claudia, to the silliness of the sum rule. And

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Speaker 2: you've been very good about you know, the people speaking

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Speaker 2: with sorted to trying to crystal ball or recession. Nobody knows, Claudia,

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Speaker 2: where we are may second the April report June sixth,

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Speaker 2: the main report, where would you guess the labor economy?

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Speaker 3: Is the fourth of July?

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Speaker 4: Oh goodness, you know the answer to that question is

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Speaker 4: going to change so much on what the administration says

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Speaker 4: the next few weeks. Right, it really can't be underscore

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Speaker 4: how like the duration of the tariffs, the bread like

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Speaker 4: do we have retaliation. I mean, again, the outlook is

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Speaker 4: not good, but it's like that that is going to

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Speaker 4: be so important, and that is that's such a wild card.

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Speaker 4: So I'll put a direction of imp unemployment rate will

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Speaker 4: be higher.

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Speaker 6: I don't know that we're four and a half at

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Speaker 6: that point, but I think that's that's the direction we're

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Speaker 6: headed unless there is a real pivot on the policy

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Speaker 6: coming out of the administration.

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Speaker 3: Doctor Sam, thank you so much. Claudia Sam.

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Speaker 2: We are honored to have you on each and every

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Speaker 2: labor David New Century Advisors, of course, definitive at Michigan

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Speaker 2: and the Federal Reserve. Neil Dunda with us number of

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Speaker 2: days ago. Generous of him to come back on this

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Speaker 2: job's day. He's with Renaissance Macro. Neil, let's start with

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Speaker 2: how you dovetail your work with Jeff de Graf on

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Speaker 2: the markets over at Renaissance Macro. Is the Neil Dutta

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Speaker 2: world such a mess that the graph freezes, goes to cash,

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Speaker 2: takes a hyper defensive position.

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Speaker 7: I mean, I think, you know, Jeff is always looking

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Speaker 7: for opportunities and you know, trying to look under the

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Speaker 7: hood to see what other people aren't seeing. And I

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Speaker 7: think he continues to do that, so you know, I

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Speaker 7: think it's times like this he's looking for, you know,

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Speaker 7: tentative evidence of a bottom the.

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Speaker 2: Job's day four point two percent. I guess a vector's

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Speaker 2: in place. Claudia Sam speaks of an important four point

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Speaker 2: five percent. I asked us yesterday at the game for him,

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Speaker 2: Neil Dott I would have asked it of you, do

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Speaker 2: you frame out a five percent unemployment rate given the

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Speaker 2: festivity in the rose garden.

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Speaker 7: I don't know about five percent. But we're going up,

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Speaker 7: I think, you know, I think we've been going up

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Speaker 7: for a while. Obviously, given the shock to financial conditions

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Speaker 7: that we've seen in recent days, that view is just amplified.

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Speaker 7: But consumers have been telling us that things are getting

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Speaker 7: worse for a while. So I had been largely expecting

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Speaker 7: a fairly linear increase in the unemployment rate. I mean

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Speaker 7: you basically have you know, ongoing layoffs. I mean they've

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Speaker 7: been coming up modestly. The hiring rate has been very

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Speaker 7: very sluggish, and rates of job finding are low, and

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Speaker 7: so when you that combination, it you know has gotten

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Speaker 7: us a fairly linear increase in the unemployment rate. The

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Speaker 7: risk now, I think is a more nonlinear increase in

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Speaker 7: the unemployment rate because of what's going on. That to

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Speaker 7: me is the risk that we need to be concerned about.

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Speaker 7: You know, hiring rates are probably be going to weaken,

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Speaker 7: and you know, at the margin, I would say layoffs

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Speaker 7: are getting worse because you know, I mean just tariffs,

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Speaker 7: I mean it's like it's like anything else with trade.

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Speaker 7: I mean, the you know, the benefits are widespread with trade,

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Speaker 7: the costs are very localized, and tariffs it's the opposite.

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Speaker 7: So the costs are spread out, the benefits are localized.

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Speaker 7: So you know, my sense is that it's hard to

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Speaker 7: argue that the shock to financial conditions won't you know,

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Speaker 7: have some spill over into the into the real economy.

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Speaker 7: And so you know, I think it makes sense to

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Speaker 7: a pencil in a higher unemployment rate forecast.

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Speaker 3: Right going forward.

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Speaker 5: So Neil, I know the administration labeled their tariff day

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Speaker 5: Liberation Day, but I see in your note happy obliteration

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Speaker 5: a day here. So walk us through the math here.

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Speaker 5: Given the numbers that we do, know, what do you

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Speaker 5: kind of run through your model that could be a hit?

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Speaker 3: Do GDP as we give a wope?

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Speaker 7: You know, well a lot of these models, I mean

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Speaker 7: if you game out like I mean, wherever the effective

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Speaker 7: tariff rate was before and what these new tariffs imply.

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Speaker 7: I mean you're talking about an effective tech tariff rate.

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Speaker 7: Basically that's like customs duties revenues as a share of

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Speaker 7: our custom you know, as a share of imports. I

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Speaker 7: mean you're basically talking about, you know, something close to

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Speaker 7: twenty five percent based I mean by our calculations, you know,

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Speaker 7: that represents you know, a little over I think a

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Speaker 7: one percentage point shock to GDP. So I think that's

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Speaker 7: kind of where, you know, how most of these calculations

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Speaker 7: are coming about. I would argue, though, that these calculations

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Speaker 7: understate conditions, you know, the hit to some extent, because

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Speaker 7: you're just looking at a direct cost. You're not You're

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Speaker 7: not sort of including like what is their ramification to

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Speaker 7: corporate confidence, household up confidence, you know, and sort of

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Speaker 7: the l over and not on effects. And I think,

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Speaker 7: you know, that's why I think it could be even worse.

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Speaker 7: But you know, I mean if these stay on, I mean,

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Speaker 7: this is basically a recession like outcome for the US economy.

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Speaker 3: Neil dan Ives was in earlier.

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Speaker 2: He suggests Big Tech will pull all guidance forward in

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Speaker 2: their conference calls. How in God's name do you take

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Speaker 2: an Excel spreadsheet and get the Dutta crystal ball out

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Speaker 2: past the vicinity of April fifteenth?

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Speaker 7: I don't, I mean, you know, to me, we're all

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Speaker 7: just guessing at this point. Maybe you should have a

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Speaker 7: game theorist, come on with you, Tom, that would probably

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Speaker 7: be the best, the best person to interview. I mean,

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Speaker 7: we sort of see these things on our international trade courses,

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Speaker 7: looking at, you know, the the.

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Speaker 8: Dynamics of a trade war. Right.

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Speaker 7: This is sort of like the classic prisoner's dilemma, and

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Speaker 7: we're kind of going through it, right. I mean, we're

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Speaker 7: seeing the part where you know, you see both sides

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Speaker 7: retaliate and you're at the worst outcome, and that seems

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Speaker 7: to be what we're getting. And you know, I do

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Speaker 7: think it's interesting. I mean, this is sort of going

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Speaker 7: a little bit beyond my wheelhouse, admittedly, but I found

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Speaker 7: it interesting that the administration said it was wise for

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Speaker 7: other countries not to retaliate because this would be some

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Speaker 7: sort of cap And yet what do we see this morning.

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Speaker 7: China retaliating and I think Europe is probably next. And

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Speaker 7: if that's the case, you know, I think you have

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Speaker 7: to really cross your fingers and hope that the White

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Speaker 7: the White House won't also retaliate. But you know, I'm

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Speaker 7: not really holding my breath best.

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Speaker 2: This is great in man Q, macroeconomics is one one

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Speaker 2: of your pages. Alan Blinder, fifteenth edition, fifteenth edition, Chapter fourteenth,

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Speaker 2: Paul is cross your fingers.

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Speaker 5: So, Neil, one of the things that's I guess concerning

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Speaker 5: me in addition to you know, kind of the math

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Speaker 5: you ran through about a what a terrafrate of twenty

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Speaker 5: five percent? What that would mean for GDP. It's just

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Speaker 5: the it seems like noticeable, noticeable decline in confidence, both

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Speaker 5: consumer confident and corporate confidence. How do you factor that

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Speaker 5: into kind of economic growth and maybe inflation expectations.

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Speaker 7: Well, I mean it's it's it's the it's for consumer confidence.

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Speaker 7: It's the speed of the decline, right that, That to

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Speaker 7: me is the big concern. I mean, consumer confidence has

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Speaker 7: been quite sluggish for a while. You know.

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Speaker 8: Look, I mean.

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Speaker 7: This is a this is a shock to the economy,

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Speaker 7: right like, So it's basically growth will slow down and

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Speaker 7: reset at a much lower level. I think, what this

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Speaker 7: what what you're going to see is basically, uh, the

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Speaker 7: high end consumer, which has been the core source of

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Speaker 7: support for consumer spending over the last year, they are

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Speaker 7: going to jack up their savings rate.

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Speaker 8: As a result of this.

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Speaker 7: I mean, you're you're in a situation now where stock

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Speaker 7: prices are going down, right. The elevated level of stock

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Speaker 7: prices is one reason why net worth was rising relative

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Speaker 7: to income last year, which is why consumer spending was

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Speaker 7: so strong because people drew down their savings as a result.

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Speaker 7: You have the opposite situation now, So what do you

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Speaker 7: think is gonna happen with the savings rate?

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Speaker 8: It's gonna go up As.

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Speaker 7: A baseline, consumer spending wasn't gonna be really much stronger

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Speaker 7: than one and a half percent right now, because that's

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Speaker 7: where real income growth has kind of been tracking net

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Speaker 7: of transfer. So we've already seen quite sluggish income.

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Speaker 3: So even a.

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Speaker 7: Stable savings rate gets you that if the savings rates

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Speaker 7: going up, you're gonna have something weaker than that. So

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Speaker 7: you can see already how it's very challenging to get

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Speaker 7: to a anything better than really the best I can

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Speaker 7: come up with is like a below potential growth environment.

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Speaker 2: Still, so maybe this job's day wasn't what's to come

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Speaker 2: in May and June and on forward. In some of

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Speaker 2: the gloom again, a four point two percent unemployment rate,

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Speaker 2: But Neil dudda on April ten, when the red sacks

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Speaker 2: are in first place on April ten, I'm looking at

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Speaker 2: as CPI report, is.

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Speaker 3: That move is lagged?

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Speaker 2: Is the unemployment rate. Are we going to see stagflation

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Speaker 2: CPI here in six days?

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Speaker 7: I mean, I think there's I mean, there may be

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Speaker 7: some possibility that the inflation number surprises to the downside,

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Speaker 7: in my opinion. I mean, you do have some you know,

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Speaker 7: some improvement in some of these areas like eggs and

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Speaker 7: so forth. I mean, you probably haven't yet seen the

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Speaker 7: upward movement in car prices just yet. Write what we

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Speaker 7: know about auction prices suggest that maybe car prices come

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Speaker 7: in a little bit, so, you know, March might be

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Speaker 7: an okay month for inflation, and normally I think that

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Speaker 7: would probably give the Fed, you know, some rope to

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Speaker 7: cut or think about it. But it's all about the

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Speaker 7: outlook now, and you know so so the data doesn't

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Speaker 7: really take on that much.

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Speaker 3: What are you going to write about this weekend?

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Speaker 2: Paul Krugman just email being says, ask Donna what he's

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Speaker 2: going to write about.

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Speaker 3: What are you going to write about this weekend?

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Speaker 7: Neil, I'm going to write about how I think the

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Speaker 7: economy was slowing, you know, going into all this trade

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Speaker 7: war stuff, and that means that the administration doesn't have

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Speaker 7: as much buffer as they thought they might have earlier.

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Speaker 7: I mean, you know, we talk about two twenty eight

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Speaker 7: on non farm perils today. I mean the revisions, I

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Speaker 7: think are what's important, right, That's where you have the

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Speaker 7: most confidence. Right. So the fact that the revisions were

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Speaker 7: down fifty thousand tells me that they didn't get as

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Speaker 7: strong of a hand as they thought they were dealt.

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Speaker 7: And you know, arguably, you know, this March number was

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Speaker 7: just a payback from weather right in January and February.

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Speaker 8: So the underlying trend is actually somewhat weaker.

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Speaker 2: So if they if they are, even Paul's been brilliant,

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Speaker 2: and as Jerry Morian Senator Mariana Kansas was just out

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Speaker 2: on CNN, people are basically saying, where are the Republicans?

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Speaker 3: Paul? You mentioned this this morning, Neil Dadda.

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Speaker 2: If this goes away, do you sense that our trust,

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Speaker 2: our confidence in our American exceptionalism is damaged?

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Speaker 8: If what goes away?

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Speaker 3: I mean yeah, if the tariffs go away.

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Speaker 7: If Trump tariffs go away, that means that I mean

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Speaker 7: that basically means that the president isn't as politically, I

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Speaker 7: mean that basically it's a it's a political nightmare for him, right.

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Speaker 7: I mean, if you're if you're betting on on that.

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Speaker 7: I mean, I don't know, Tom. I mean, I think

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Speaker 7: to me, I wrote about this quickly this morning. I

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Speaker 7: think he believes he was spared an assassin's bullet to

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Speaker 7: do what he's doing. So why does anybody think he's

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Speaker 7: going to be backing off anytime soon?

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Speaker 3: This is what he believes.

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Speaker 2: It's a part.

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Speaker 7: Of his political identity if he if he backs off now,

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Speaker 7: that's an uncontal surrender, which makes him basically impotent politically

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Speaker 7: going forward. I mean, it's too soon for that to

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Speaker 7: happen in my opinion.

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Speaker 2: Neil, thank you so much, and as thank you President

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Speaker 2: Trump for listening to surveillance this morning.

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Speaker 3: Paul and I got to take a break. Paul's going

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Speaker 3: to bring her in.

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Speaker 2: Jamie Patton is out of TCW and Los Angeles. Every

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Speaker 2: time she speaks, I learned something, of course, maybe in

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Speaker 2: this crisis will learn something.

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Speaker 5: I want to learn what her when.

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Speaker 3: Do the Dodgers lose exactly?

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Speaker 5: I want to learn what her favorite sandwich was at

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Speaker 5: Hogie Haven in for instance, she spent some time there.

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Speaker 5: Jamie Patten, co head of Global Rates at TCW, joins us, Jamie,

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Speaker 5: what do you make of kind of what we're seeing

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Speaker 5: out there in your market, the treasury.

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Speaker 9: Bond market, it's been busy. I think obviously risk markets

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Speaker 9: are very disappointed by all the tariffs, but treasuries are

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Speaker 9: great again, so.

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Speaker 7: We love this move. We were much.

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Speaker 9: More confused by the initial reaction to a Trump presidency

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Speaker 9: and tariffs and anti immigration and all of that. That's

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Speaker 9: there's nothing surprising about this. Tariffs are bad for growth,

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Speaker 9: they're bad for the consumer, they're bad for the economy.

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Speaker 4: They're bad.

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Speaker 9: So this is the right market reaction. I'm a little

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Speaker 9: confused why it took so long. It's like the market

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Speaker 9: didn't believe what Trump was saying until not even Tuesday.

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Speaker 9: Even when he said it Tuesday, it was really like

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Speaker 9: Wednesday that market participants for like, oh this is serious,

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Speaker 9: this is bad. But his whole campaign and all up

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Speaker 9: until now, he's been telling us what he's going to do.

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Speaker 9: So I think, unfortunately we need to believe him, which

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Speaker 9: is great for bonds and great for TCW. You know,

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Speaker 9: we've been long duration in the front end.

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Speaker 2: What should mom and pop do here? Would their fixed

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Speaker 2: income take us away from geniosity? Jamie Patten and Princeton

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Speaker 2: and derivatives and mathewness.

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Speaker 3: And all that.

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Speaker 2: What do mom and pop do in fixed income over

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Speaker 2: the weekend?

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Speaker 9: I'll tell you what I tell my parents to do,

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Speaker 9: because please get Allocating into fixed income is a great

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Speaker 9: idea right now, but you have to be really careful.

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Speaker 9: So how we're positioned at TCW, we're long duration. We

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Speaker 9: love that we're lightening up just because we don't call

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Speaker 9: tops and bottoms and we dollar cost average in and

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Speaker 9: out just to be prudent risk managers. But we're also

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Speaker 9: still very underweak credit. So you can be long fixed

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Speaker 9: income but also in an extra defensive position, but you

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Speaker 9: don't want to bleed out on carry. So at the

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Speaker 9: same time, you can be underweight credit, long duration and treasuries,

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Speaker 9: and then we're also long. We like agency mortgages. They're

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Speaker 9: basically government guaranteed. They should do well regardless of risk

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Speaker 9: on risk off. Maybe you have a little bit of

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Speaker 9: pain in the beginning of a risk off, but overall

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Speaker 9: their money good. So we like allocations to fixed income,

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Speaker 9: but you have to be careful. Don't just go all

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Speaker 9: into credit to pick up a few extra basis points.

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Speaker 9: This is not the environment to just pick up carry.

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Speaker 5: So in terms of just kind of the market here,

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Speaker 5: talk to us about where you think. I'm looking at

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Speaker 5: the tenure here three point nine to two percent. Where

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Speaker 5: do we go here?

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Speaker 9: I think we still go a little bit lower. The

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Speaker 9: ten yere is a good question because we still have

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Speaker 9: this dynamic of nothing has been done to improve the deficit.

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Speaker 9: We still have increasing term premiums and a lot of

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Speaker 9: treasury issuing, so the curve could easily go a lot steeper.

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Speaker 9: So if you're choosing your long duration position, we still

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Speaker 9: like concentrating that more towards the belly and the front end.

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Speaker 9: And what I mean better is choose and fives. But overall,

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Speaker 9: this is a bad situation. The Fed's in a terrible situation.

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Speaker 9: They have high inflation, but not the good inflation, not

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Speaker 9: the demand driven inflation, and they need to cool economy,

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Speaker 9: and then they have a terrible growth situation. They should

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Speaker 9: be a neutral, They should have been a neutral a

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Speaker 9: while ago. So we're watching a policy mistake happen. But

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Speaker 9: they're too scared to lower rates when they see scary

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Speaker 9: inflation numbers.

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Speaker 2: As partly, it's off your remit, but I know you're

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Speaker 2: done at Michael's and Santa Monica doing this. I mean

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Speaker 2: at TCW, are you modeling in an aggressive FED of

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Speaker 2: three and four rate cuts this year? I mean, I

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Speaker 2: know it's not your game, but con you're talking about it, Jamie,

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Speaker 2: are you doing that?

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Speaker 9: It is my game. I love telling people what to do,

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Speaker 9: whether it's my job or not.

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Speaker 3: So I'm shocked me.

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Speaker 9: So we think these FED cuts it makes sense that

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Speaker 9: they're priced or they're pushed out the curve, but we don't.

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Speaker 9: They'll be priced out. So as the FED cuts get

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Speaker 9: pushed a little bit further away, they're going to have

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Speaker 9: to cut more and faster. So if they had been

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Speaker 9: a little bit more conservative and kind of gotten back

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Speaker 9: to neutral when we think they probably should have, which

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Speaker 9: was over the past few months, then they wouldn't have

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Speaker 9: had to cut as much. But they're going to wait.

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Speaker 9: They're going to be too high for too long, and

437
00:22:20,560 --> 00:22:22,800
Speaker 9: then it's going to be a larger than expected problem

438
00:22:23,280 --> 00:22:25,840
Speaker 9: and they'll have to cut more. That's why we keep

439
00:22:26,320 --> 00:22:27,920
Speaker 9: a little bit of our long even though we are

440
00:22:28,000 --> 00:22:28,479
Speaker 9: lightning up.

441
00:22:28,680 --> 00:22:31,280
Speaker 2: Jamie Patton, TCW, thank you so much from the West

442
00:22:31,280 --> 00:22:32,320
Speaker 2: Coast early in our morning.

443
00:22:32,400 --> 00:22:33,600
Speaker 3: Really really appreciate that.

444
00:22:39,680 --> 00:22:43,280
Speaker 1: You're listening to the Bloomberg surveillance podcast. Catch us live

445
00:22:43,320 --> 00:22:46,480
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

446
00:22:46,560 --> 00:22:50,240
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business Up, or

447
00:22:50,400 --> 00:22:51,920
Speaker 1: watch us live on YouTube.

448
00:22:52,080 --> 00:22:54,320
Speaker 3: We're thrilled that Dan Ives could be with us today.

449
00:22:54,400 --> 00:22:57,080
Speaker 2: Is not on a plane, not in a hotel room somewhere,

450
00:22:57,359 --> 00:23:01,720
Speaker 2: not watching Penn State in the Frozen four. He's here everyone, Dan,

451
00:23:01,960 --> 00:23:03,919
Speaker 2: I'm gonna cut to the chase. You and I have

452
00:23:04,040 --> 00:23:09,359
Speaker 2: been here before. Is the opportunity still there in mag

453
00:23:09,560 --> 00:23:14,119
Speaker 2: seven for the brave to acquire shares this morning?

454
00:23:14,760 --> 00:23:17,000
Speaker 10: Look, I'd say yes and no. I mean, like tom

455
00:23:17,040 --> 00:23:19,359
Speaker 10: My view is like twenty five years doing this, and

456
00:23:19,400 --> 00:23:23,440
Speaker 10: we've told about this for decades. Here these are his opportunities.

457
00:23:23,440 --> 00:23:27,480
Speaker 10: In my long term view of tech, Trump tariff is

458
00:23:27,520 --> 00:23:31,120
Speaker 10: an economic armageddon if it stays in its current form.

459
00:23:31,480 --> 00:23:35,400
Speaker 10: In my view, it changes the whole tech paradigm from

460
00:23:35,400 --> 00:23:37,800
Speaker 10: a supply chain and from a growth perspective. And I

461
00:23:37,840 --> 00:23:40,320
Speaker 10: think that right now is the scary thing for the

462
00:23:40,359 --> 00:23:43,240
Speaker 10: long term. Of course, I continue to be bullish in

463
00:23:43,320 --> 00:23:47,560
Speaker 10: terms of these, but look, this is a black swan

464
00:23:47,680 --> 00:23:51,560
Speaker 10: event what he single handedly has done on a self

465
00:23:51,600 --> 00:23:52,560
Speaker 10: inflicted way.

466
00:23:53,880 --> 00:23:56,879
Speaker 5: Dan, I mean, what do you hear from the folks

467
00:23:56,960 --> 00:24:00,439
Speaker 5: in Silicon Valley these days, because I mean made more

468
00:24:00,440 --> 00:24:04,240
Speaker 5: of a pilgrimage to support this president than Silicon Valley

469
00:24:04,280 --> 00:24:08,960
Speaker 5: going against you know, decades of history. They're not getting

470
00:24:09,040 --> 00:24:09,920
Speaker 5: much payback, are they?

471
00:24:10,080 --> 00:24:12,960
Speaker 10: And I think that's to me like talking to tech

472
00:24:13,040 --> 00:24:15,800
Speaker 10: executives the last four to eight hours, that's just got

473
00:24:15,960 --> 00:24:18,879
Speaker 10: me more concerned because when you talk to them, if

474
00:24:18,880 --> 00:24:22,440
Speaker 10: there's some sort of broader plan and instead like they're

475
00:24:22,480 --> 00:24:26,359
Speaker 10: asking you what you think and they look, I come.

476
00:24:26,440 --> 00:24:28,600
Speaker 10: I don't think companies are gonna I don't think Apple's

477
00:24:28,640 --> 00:24:30,199
Speaker 10: gonna give guidance on it his call. I don't think

478
00:24:30,200 --> 00:24:31,880
Speaker 10: a lot of these techicoms are going to give guidance

479
00:24:31,960 --> 00:24:36,000
Speaker 10: because it is that uncertain, because the reality is, like god,

480
00:24:36,320 --> 00:24:40,119
Speaker 10: fifty four percent increase that would destruct ten percent of demand.

481
00:24:40,240 --> 00:24:43,480
Speaker 2: Stillantis is out there with layoffs and windsor Ontario. I

482
00:24:43,480 --> 00:24:46,399
Speaker 2: think two three days ago, I got Microsoft at two

483
00:24:46,480 --> 00:24:49,840
Speaker 2: hundred and twenty eight thousand employees. Are you looking where

484
00:24:50,040 --> 00:24:53,199
Speaker 2: Nadella and his team? Look, these are the cards this

485
00:24:53,320 --> 00:24:57,120
Speaker 2: president delld us We're laying off six percent of our people,

486
00:24:57,600 --> 00:24:58,959
Speaker 2: thirteen thousand people.

487
00:24:59,320 --> 00:25:02,439
Speaker 10: You have to assume and the assumption is it. It

488
00:25:02,720 --> 00:25:05,359
Speaker 10: starts with this is some form of negotiation.

489
00:25:05,680 --> 00:25:06,760
Speaker 3: Okay, conversation.

490
00:25:07,600 --> 00:25:10,480
Speaker 10: Again, if you if you take these tariff at there,

491
00:25:10,960 --> 00:25:13,399
Speaker 10: the way that they're laid out in that chart that

492
00:25:13,960 --> 00:25:17,679
Speaker 10: is really viewed as a comedy show, then it's an

493
00:25:17,680 --> 00:25:20,000
Speaker 10: economic arm Again. If the tariff's staining, it's coming forward,

494
00:25:20,000 --> 00:25:23,879
Speaker 10: and to some extent, I you're essentially including Silicon Valley

495
00:25:23,920 --> 00:25:27,520
Speaker 10: based on from a from a cost and supply chain perspective.

496
00:25:28,080 --> 00:25:31,360
Speaker 10: The reason layoffs won't happen is these tech companies gonna Okay,

497
00:25:31,400 --> 00:25:34,359
Speaker 10: let's see the next few months. Let's ultimately see how

498
00:25:34,359 --> 00:25:38,040
Speaker 10: the games played if this actually holds. And then but

499
00:25:38,119 --> 00:25:40,640
Speaker 10: if we're if we have these tariffs in place by

500
00:25:40,680 --> 00:25:42,640
Speaker 10: the summer, it's all bets off.

501
00:25:43,400 --> 00:25:46,920
Speaker 5: So I think about some of these tech investments, says

502
00:25:47,200 --> 00:25:52,479
Speaker 5: A big ticket items, long term investments. I guess one

503
00:25:52,520 --> 00:25:55,760
Speaker 5: of the concerns is, boy, if I'm just an executive

504
00:25:55,760 --> 00:25:58,879
Speaker 5: in general and I'm thinking about making a multi million

505
00:25:58,960 --> 00:26:02,640
Speaker 5: dollars one hundred million dollar investment in some tech hardware software,

506
00:26:02,720 --> 00:26:03,680
Speaker 5: I'm going to sit back here.

507
00:26:03,760 --> 00:26:06,040
Speaker 3: The stuff, the stuffhob ibo is delayed.

508
00:26:06,080 --> 00:26:07,800
Speaker 5: Yeah, I mean, just as one, I'm just gonna step

509
00:26:07,880 --> 00:26:09,320
Speaker 5: back and self fulfilling profits.

510
00:26:09,480 --> 00:26:11,399
Speaker 10: Yeah, and that and that's the word. And Tom I

511
00:26:11,400 --> 00:26:15,679
Speaker 10: would say, for every month that these tariffs are in place,

512
00:26:15,920 --> 00:26:20,000
Speaker 10: you take off another ten percent of demand in the year.

513
00:26:20,320 --> 00:26:22,440
Speaker 10: So right now you already have ten percent in terms

514
00:26:22,480 --> 00:26:24,720
Speaker 10: of what's already gonna be baked in. Ten percent number

515
00:26:24,800 --> 00:26:25,840
Speaker 10: cuts across the board.

516
00:26:25,960 --> 00:26:28,920
Speaker 2: Mark from Los Angeles femails and Susstan ives about Apple.

517
00:26:28,960 --> 00:26:31,679
Speaker 2: We'll do that, Mark German right now. Okay, let's double

518
00:26:31,720 --> 00:26:35,480
Speaker 2: barrel it. They they're addicted to share buybacks. They cleared

519
00:26:35,560 --> 00:26:38,679
Speaker 2: out with this plunge. They come out, they release a

520
00:26:38,720 --> 00:26:43,119
Speaker 2: new announcement of share buybacks and they got as I

521
00:26:43,160 --> 00:26:45,800
Speaker 2: mentioned to Kathy Jones, they have to come out and

522
00:26:45,840 --> 00:26:46,640
Speaker 2: issue that now.

523
00:26:47,000 --> 00:26:47,480
Speaker 3: Well, I.

524
00:26:49,359 --> 00:26:52,080
Speaker 10: Do agree on that front that they'll they'll definitely go

525
00:26:52,119 --> 00:26:55,120
Speaker 10: down that route. My thing is that it would take

526
00:26:55,160 --> 00:26:58,879
Speaker 10: them three years to take ten percent of the supply

527
00:26:59,040 --> 00:27:00,920
Speaker 10: chain move it to the U and now it costs

528
00:27:01,040 --> 00:27:04,760
Speaker 10: sort happen. So the point is it's it's right now

529
00:27:04,800 --> 00:27:07,480
Speaker 10: about the supply chain and what this is ultimately doing.

530
00:27:07,480 --> 00:27:09,960
Speaker 10: But that's why for Apple, if you're a long term

531
00:27:10,000 --> 00:27:12,760
Speaker 10: shareholder and a long term investor, you own it if

532
00:27:12,760 --> 00:27:14,680
Speaker 10: you're a trader right now, it's a cleer to go low.

533
00:27:14,760 --> 00:27:21,000
Speaker 2: Paul and I are expert analyzing Chinese supply chain dynamics

534
00:27:21,000 --> 00:27:23,440
Speaker 2: from where the Barrett michaels, So I think that's where

535
00:27:23,480 --> 00:27:27,080
Speaker 2: we do it. You actually go to China. What will

536
00:27:27,080 --> 00:27:30,480
Speaker 2: Tim Cook do in the tip for tap between US

537
00:27:30,560 --> 00:27:33,720
Speaker 2: and China? Does he increase labor in China?

538
00:27:33,840 --> 00:27:36,720
Speaker 3: Does he pull away? Do they push Apple out?

539
00:27:37,280 --> 00:27:40,480
Speaker 10: So first, a pushing Apple out is basically impossible. Remember

540
00:27:40,520 --> 00:27:43,720
Speaker 10: Apple at peak's second biggest employer in China when it

541
00:27:43,720 --> 00:27:47,159
Speaker 10: comes to iPhone demand. Look, the reality is that for

542
00:27:47,280 --> 00:27:50,840
Speaker 10: Cook and ironqicly the everything they moved to Vietnam, it's

543
00:27:50,840 --> 00:27:54,400
Speaker 10: actually hired tariff than China. So clearly this is where

544
00:27:54,440 --> 00:27:58,200
Speaker 10: that ten percent politician Cooke, nine percent CEO maybe goes

545
00:27:58,200 --> 00:28:02,439
Speaker 10: to fifty percent politics fifty percent. You know what types

546
00:28:02,520 --> 00:28:05,520
Speaker 10: of ultimately exemptions do they get in terms of what

547
00:28:05,560 --> 00:28:09,280
Speaker 10: they did in the US From an investment perspective. Munusian

548
00:28:09,440 --> 00:28:12,200
Speaker 10: talked about that as well. Do they get some sort

549
00:28:12,240 --> 00:28:14,640
Speaker 10: of breaks? And I think for Apple it just comes

550
00:28:14,680 --> 00:28:17,440
Speaker 10: down that they are not. Cook is not gonna change

551
00:28:17,920 --> 00:28:22,480
Speaker 10: the long term structural footprint of Apple because of these

552
00:28:22,520 --> 00:28:25,359
Speaker 10: head scratching tariffs the way they were laid out, and

553
00:28:25,440 --> 00:28:26,760
Speaker 10: ultimately to see how they play out.

554
00:28:26,840 --> 00:28:28,440
Speaker 3: Dan Ies with Wedbush Kathy Jones.

555
00:28:28,480 --> 00:28:30,439
Speaker 2: Earlier from Charles shap we welcome all of you on

556
00:28:30,480 --> 00:28:33,760
Speaker 2: your community across the nation, particular, good morning to ninety

557
00:28:33,840 --> 00:28:36,600
Speaker 2: nine and one FM and Washington heads spinning down there.

558
00:28:36,640 --> 00:28:41,400
Speaker 2: So sender Grassley of Iowa really fired up yesterday over

559
00:28:41,440 --> 00:28:42,280
Speaker 2: what are we gonna.

560
00:28:42,080 --> 00:28:44,320
Speaker 3: Do about this? What we're gonna do is bring you

561
00:28:44,400 --> 00:28:46,040
Speaker 3: the conversation on this job day.

562
00:28:46,080 --> 00:28:49,280
Speaker 2: Claudia Samnil Dutta with this later Kate Moore in the

563
00:28:49,360 --> 00:28:53,720
Speaker 2: nine o'clock hour, Paul swhen he continues with ives of webbush.

564
00:28:53,480 --> 00:28:56,120
Speaker 5: Dan it realistically, when you talk to the folks in

565
00:28:56,160 --> 00:29:00,520
Speaker 5: Silicon Valley, what if any can production and the tech

566
00:29:00,960 --> 00:29:04,240
Speaker 5: supply chain can be brought back to the US in reality.

567
00:29:03,840 --> 00:29:07,640
Speaker 10: In the next two to three years basically two percent.

568
00:29:07,960 --> 00:29:09,880
Speaker 10: Now I'm saying what you talk right, It would take

569
00:29:09,920 --> 00:29:12,320
Speaker 10: four to five years to build a factory from a

570
00:29:12,400 --> 00:29:16,480
Speaker 10: cost structure. iPhones if you built them in the US

571
00:29:16,760 --> 00:29:18,320
Speaker 10: would cost thirty five hundred dollars.

572
00:29:18,440 --> 00:29:19,520
Speaker 3: Okay, you know what I'm saying.

573
00:29:20,040 --> 00:29:21,840
Speaker 10: So the point is like every time, Like you know,

574
00:29:21,920 --> 00:29:23,960
Speaker 10: investors are when I'm in DC a few weeks so

575
00:29:24,040 --> 00:29:26,520
Speaker 10: that we get we need to buy them here, I'm like, well, look,

576
00:29:26,520 --> 00:29:30,000
Speaker 10: the reality is is that that basically burnt, like that

577
00:29:30,320 --> 00:29:34,840
Speaker 10: would basically be imploding Silicon Valley the way that it's

578
00:29:34,880 --> 00:29:37,720
Speaker 10: built to the core of the last forty years.

579
00:29:38,000 --> 00:29:40,640
Speaker 2: Okay, over the weekend, they're gonna ca then the market

580
00:29:40,720 --> 00:29:43,520
Speaker 2: right now, future soaks down one thousand, make the Dow

581
00:29:43,640 --> 00:29:45,120
Speaker 2: futures down two thousand points.

582
00:29:45,280 --> 00:29:46,720
Speaker 3: We're under forty thousand.

583
00:29:47,080 --> 00:29:51,360
Speaker 2: Wow on Dow futures, the vics thirty nine point one seven,

584
00:29:51,600 --> 00:29:54,000
Speaker 2: the ten year yield we mentioned with Kathy comes in.

585
00:29:54,040 --> 00:29:56,960
Speaker 2: Where are we My eyes are failing me on a Friday.

586
00:29:57,000 --> 00:30:00,520
Speaker 2: It's Friday, right, yeah, three point eight seven, said Dan,

587
00:30:00,560 --> 00:30:02,680
Speaker 2: And I swear this this is going to get.

588
00:30:02,520 --> 00:30:03,840
Speaker 3: Fixed over the weekend.

589
00:30:04,000 --> 00:30:08,440
Speaker 2: Where is the ives' greatest conviction single stock? Where are

590
00:30:08,440 --> 00:30:11,640
Speaker 2: you buying an odlock for DNA eight thousand?

591
00:30:12,160 --> 00:30:15,320
Speaker 10: It's it's Apple and the media. I mean the two needs,

592
00:30:15,560 --> 00:30:18,719
Speaker 10: Like if you have a horizon over three to six months,

593
00:30:19,440 --> 00:30:21,640
Speaker 10: Apple and the media. Because the view is here is

594
00:30:21,640 --> 00:30:25,760
Speaker 10: that what's being baked into these stocks is already a recession.

595
00:30:25,880 --> 00:30:28,640
Speaker 10: And already ten to fifteen percent numbers cuts. So if

596
00:30:28,680 --> 00:30:32,880
Speaker 10: you get any deal, those are the names right here.

597
00:30:33,160 --> 00:30:35,800
Speaker 2: What's the elasticity or revenue for Apple? I mean it's

598
00:30:35,800 --> 00:30:39,080
Speaker 2: been single digit. The Apple haters, the people that you know,

599
00:30:39,160 --> 00:30:41,320
Speaker 2: there's people that hate Dana ives can't imagine.

600
00:30:41,320 --> 00:30:44,400
Speaker 3: It's uncas, there's complete Twitter's wardrobe.

601
00:30:44,440 --> 00:30:46,120
Speaker 5: I'm a net camm, it's.

602
00:30:46,080 --> 00:30:48,560
Speaker 2: You know, I gotta get this in before we get

603
00:30:48,600 --> 00:30:51,920
Speaker 2: to Penn State hockey. Okay, damn, this is critical. They

604
00:30:51,920 --> 00:30:55,080
Speaker 2: don't have revenue growth. That's almost to their advantage now

605
00:30:55,400 --> 00:30:57,720
Speaker 2: that they're managing for cash flow.

606
00:30:57,880 --> 00:31:00,560
Speaker 10: And then more and more everything you've is talked about.

607
00:31:00,600 --> 00:31:03,400
Speaker 10: Now more of that cash flow, because remember that's gonna

608
00:31:03,920 --> 00:31:07,239
Speaker 10: dramatically change now that valuation that that gives it a

609
00:31:07,240 --> 00:31:10,480
Speaker 10: beast case in what I believe, Afloor. I mean, I

610
00:31:10,480 --> 00:31:13,880
Speaker 10: think where Apple's trading here, we start to be begging

611
00:31:13,880 --> 00:31:17,160
Speaker 10: in almost a massive number cut relative to where the

612
00:31:17,160 --> 00:31:18,040
Speaker 10: stock's gonna open.

613
00:31:18,280 --> 00:31:22,000
Speaker 2: Apple done five percent, Video down four percent. I don't care, Dan,

614
00:31:22,080 --> 00:31:24,880
Speaker 2: I is the only reason you're here. Penn State hockey

615
00:31:25,120 --> 00:31:27,480
Speaker 2: frozen four How they get there so quickly?

616
00:31:27,880 --> 00:31:30,200
Speaker 10: I mean, look, guy Gadowski and that team you know,

617
00:31:30,280 --> 00:31:32,280
Speaker 10: Aiden Fink. I mean, if you look at it, I mean,

618
00:31:32,360 --> 00:31:35,480
Speaker 10: Penn State hockey, if I've been one of the best stories,

619
00:31:35,560 --> 00:31:38,160
Speaker 10: not just now Canadian. I mean there's a lot of

620
00:31:38,200 --> 00:31:40,800
Speaker 10: Canadian but but but but you do have a lot

621
00:31:40,840 --> 00:31:42,640
Speaker 10: of us as well. And I think I think they're

622
00:31:42,640 --> 00:31:44,040
Speaker 10: gonna They're gonna make some noise.

623
00:31:44,080 --> 00:31:46,440
Speaker 5: And the wrestling team won yet again.

624
00:31:46,480 --> 00:31:47,080
Speaker 3: It's an epic.

625
00:31:47,280 --> 00:31:49,320
Speaker 10: Look, it's an epic year for Penn's across the board

626
00:31:49,320 --> 00:31:50,400
Speaker 10: when it comes to sports.

627
00:31:52,880 --> 00:31:56,640
Speaker 2: But the football, the basketball they killed win the Big Game,

628
00:31:57,040 --> 00:31:59,040
Speaker 2: just Frozen four at the same disease.

629
00:31:59,240 --> 00:32:02,840
Speaker 10: But it's the start of ultimately, first I think I think,

630
00:32:02,880 --> 00:32:05,800
Speaker 10: I think we're gonna coming back. We know, I think

631
00:32:05,840 --> 00:32:08,720
Speaker 10: we ultimately, I think we can win this Frozen four.

632
00:32:09,160 --> 00:32:11,640
Speaker 10: And I think Keen when we talked, Once the tariffs

633
00:32:11,680 --> 00:32:13,680
Speaker 10: get lifted, and then we're gonna be talking about Penzi

634
00:32:13,800 --> 00:32:15,480
Speaker 10: twenty twenty five national champ.

635
00:32:15,600 --> 00:32:19,680
Speaker 2: Can you imagine the elasticity if there's somehow this tariff

636
00:32:19,720 --> 00:32:20,719
Speaker 2: madness is listed.

637
00:32:20,840 --> 00:32:24,000
Speaker 3: I mean, but if we've never seen.

638
00:32:23,800 --> 00:32:26,960
Speaker 10: This, it will be I mean historical, but you know,

639
00:32:27,080 --> 00:32:29,160
Speaker 10: right now continues to be a science experiment.

640
00:32:29,200 --> 00:32:30,920
Speaker 3: Did you see when the market craters.

641
00:32:30,920 --> 00:32:33,920
Speaker 5: He tones down the color exactly so real quick you

642
00:32:34,000 --> 00:32:36,920
Speaker 5: say this tech party. This ends at four am. It

643
00:32:37,080 --> 00:32:38,920
Speaker 5: feels like the parents came in and broke up the party.

644
00:32:39,000 --> 00:32:42,880
Speaker 10: Year look, Trump basically came broke up the party. Cops

645
00:32:42,920 --> 00:32:47,080
Speaker 10: came and Louise for now, the party is off because

646
00:32:47,160 --> 00:32:48,080
Speaker 10: Trump broke it up.

647
00:32:48,440 --> 00:32:51,200
Speaker 3: Dan, I thank you so much for coming in dinnis Web.

648
00:32:51,200 --> 00:32:55,160
Speaker 1: But this is the Bloomberg Surveillance Podcast. Listen live each

649
00:32:55,200 --> 00:32:58,240
Speaker 1: weekday starting at seven am Eastern on Apple Corplay and

650
00:32:58,240 --> 00:33:01,280
Speaker 1: Android Otto with the Bloomberg Business Up. You can also

651
00:33:01,400 --> 00:33:05,040
Speaker 1: listen live on Amazon Alexa from our flagship New York station,

652
00:33:05,600 --> 00:33:08,600
Speaker 1: Just say Alexa, Play Bloomberg eleven thirty.

653
00:33:08,920 --> 00:33:11,720
Speaker 3: Many talk, some do.

654
00:33:12,360 --> 00:33:18,160
Speaker 2: David Blanchflower changed Atlantic economics out of England decades ago

655
00:33:18,760 --> 00:33:21,280
Speaker 2: with a thin book out of Mit Press called The

656
00:33:21,320 --> 00:33:25,160
Speaker 2: Wage Curve. Everybody had to stop and read it. And

657
00:33:25,200 --> 00:33:29,080
Speaker 2: it was about the dynamics of labor, the dynamics of

658
00:33:29,120 --> 00:33:33,800
Speaker 2: our wage, our inflation adjusted wage. The thing about Blancheflower

659
00:33:33,840 --> 00:33:36,720
Speaker 2: that's great is up in the sunny climbs of Hanover.

660
00:33:36,840 --> 00:33:41,280
Speaker 2: He could have retired like fifteen years ago. Instead we're

661
00:33:41,280 --> 00:33:46,840
Speaker 2: inflicted with Blancheflower. Bryson, which is him continuing his granular

662
00:33:47,000 --> 00:33:52,360
Speaker 2: research forward on the American labor economy. Professor Blanchflower, thank

663
00:33:52,400 --> 00:33:53,920
Speaker 2: you for joining us as we get out to the

664
00:33:54,000 --> 00:33:56,680
Speaker 2: jobs report with Claudia sam and Neil Dada.

665
00:33:57,080 --> 00:33:59,120
Speaker 3: David Blanchflower, how bad is it?

666
00:34:01,000 --> 00:34:05,840
Speaker 11: Well, it's pretty bad. Take my role as well as

667
00:34:05,840 --> 00:34:09,399
Speaker 11: the central banker. I think that the central bankers will

668
00:34:09,400 --> 00:34:13,440
Speaker 11: be sitting there with unbelievable amounts of uncertainty thinking, you know,

669
00:34:13,520 --> 00:34:17,160
Speaker 11: this is catching a falling knife. It does look like chaos,

670
00:34:17,480 --> 00:34:20,480
Speaker 11: and it's unclear where this is going. Certainly we're going

671
00:34:20,480 --> 00:34:22,120
Speaker 11: to see some stuff in the labor market, and I

672
00:34:22,160 --> 00:34:23,960
Speaker 11: suspect this will be the you.

673
00:34:23,920 --> 00:34:25,760
Speaker 8: Know, the tip at the top of the cliff.

674
00:34:25,880 --> 00:34:29,719
Speaker 11: Probably, I think, you know, think about if you were

675
00:34:29,719 --> 00:34:31,680
Speaker 11: a central banker. On the one hand, you're worried about

676
00:34:31,680 --> 00:34:34,279
Speaker 11: inflation coming, so you think, oh, with that, I have

677
00:34:34,360 --> 00:34:38,800
Speaker 11: to raise rates. You're also sitting there seeing the probability

678
00:34:39,160 --> 00:34:41,319
Speaker 11: of a global recession coming and you think, well, if

679
00:34:41,320 --> 00:34:43,879
Speaker 11: that's the case, I have to cut rates. So we're

680
00:34:43,920 --> 00:34:47,440
Speaker 11: really sitting here sitting waiting, watching seeing how far this goes,

681
00:34:47,520 --> 00:34:49,480
Speaker 11: and the and the and the stop for as you

682
00:34:49,480 --> 00:34:51,759
Speaker 11: were just talking about don't look good. So I think

683
00:34:51,760 --> 00:34:55,040
Speaker 11: this is chaos. I think it's there's no sense in

684
00:34:55,080 --> 00:34:57,520
Speaker 11: which this makes any sense, and why you would want

685
00:34:57,520 --> 00:34:59,840
Speaker 11: to impose an enormous taxing.

686
00:35:00,080 --> 00:35:01,919
Speaker 8: He's on the American public. I don't know.

687
00:35:02,239 --> 00:35:04,719
Speaker 2: What's so important here, folks. And again this formula is

688
00:35:04,760 --> 00:35:08,320
Speaker 2: trotting out thanks to Steve Ratner over with Joe and Mika,

689
00:35:08,360 --> 00:35:11,600
Speaker 2: who had did a really nice explanation of the absolute

690
00:35:11,680 --> 00:35:15,560
Speaker 2: idiocy of this formula. The one who figured out that

691
00:35:15,719 --> 00:35:19,759
Speaker 2: idiocy was James Siriricki of The New Yorker magazine and

692
00:35:19,800 --> 00:35:20,719
Speaker 2: now at the Atlantic.

693
00:35:20,960 --> 00:35:23,880
Speaker 3: Here's what Siri Ricky says about David blanche Flower.

694
00:35:24,520 --> 00:35:27,120
Speaker 2: This is akin to the quote the wisdom of crowds,

695
00:35:27,440 --> 00:35:33,640
Speaker 2: whereby the aggregate predictions of non experts often produce more

696
00:35:33,760 --> 00:35:35,000
Speaker 2: accurate assessments.

697
00:35:35,239 --> 00:35:36,879
Speaker 3: David blanche Flower, what.

698
00:35:36,800 --> 00:35:40,600
Speaker 2: Did the plain and simple non economist Americans say right now?

699
00:35:41,200 --> 00:35:44,399
Speaker 11: Well, if you so, I've spent on Claudias, I'm gonna

700
00:35:44,400 --> 00:35:44,960
Speaker 11: have on in a while.

701
00:35:45,000 --> 00:35:46,359
Speaker 8: She's been really good at this stuff too.

702
00:35:46,400 --> 00:35:50,279
Speaker 11: But if you try and think about predicting downturns, and

703
00:35:50,280 --> 00:35:53,319
Speaker 11: for the technically minded, I look at what did the

704
00:35:53,440 --> 00:35:57,360
Speaker 11: NBR business Cycle Dating Committee, CORP recession. So the question is,

705
00:35:57,400 --> 00:36:00,880
Speaker 11: at the moment you're sitting at, what is the predictor?

706
00:36:01,239 --> 00:36:04,640
Speaker 8: And we'll go with two. The best predictors actually.

707
00:36:04,280 --> 00:36:08,360
Speaker 11: Are the essentially consumer expectations in disease.

708
00:36:08,480 --> 00:36:09,600
Speaker 8: Are they below eighty?

709
00:36:10,040 --> 00:36:14,200
Speaker 11: And the answer is both the Conference Board and Michigan

710
00:36:14,400 --> 00:36:15,480
Speaker 11: surveys are looking.

711
00:36:15,320 --> 00:36:19,280
Speaker 8: In horrendous space. Seven of the eighth states.

712
00:36:18,880 --> 00:36:22,279
Speaker 11: That they report for a forecast in recession, and if

713
00:36:22,320 --> 00:36:25,440
Speaker 11: you look back to twenty this was exactly what you

714
00:36:25,480 --> 00:36:27,520
Speaker 11: would see. But the second one, actually Tom that I'm

715
00:36:27,520 --> 00:36:31,800
Speaker 11: really looking at, is are there success two successive months

716
00:36:32,120 --> 00:36:36,719
Speaker 11: of employment declines either on the household account or on

717
00:36:36,760 --> 00:36:40,640
Speaker 11: the establishment account. So we saw a positive last month

718
00:36:40,880 --> 00:36:44,279
Speaker 11: on the establishment account, but we saw minus five eight

719
00:36:44,320 --> 00:36:47,080
Speaker 11: eight on the household account, So are be watching that

720
00:36:47,280 --> 00:36:50,520
Speaker 11: very hard? Does that come in today negative? If it does,

721
00:36:50,960 --> 00:36:53,880
Speaker 11: that's a big predictor of recession. So I think the

722
00:36:54,040 --> 00:36:59,000
Speaker 11: likelihood is probably that the NBR will perhaps date a

723
00:36:59,120 --> 00:37:03,400
Speaker 11: starting recession in April twenty twenty five, perhaps may, but

724
00:37:03,480 --> 00:37:06,000
Speaker 11: I think we'll see that now if the data comes

725
00:37:06,000 --> 00:37:10,520
Speaker 11: into day anything like that, the consumer confidence dat has collapsed.

726
00:37:10,800 --> 00:37:12,640
Speaker 8: I mean, that's where we are I think.

727
00:37:12,719 --> 00:37:14,720
Speaker 3: And we'll have that for you in twenty one minutes.

728
00:37:14,800 --> 00:37:15,600
Speaker 3: Paul Professor.

729
00:37:15,640 --> 00:37:17,640
Speaker 5: I know when we spoke to you last in November,

730
00:37:17,760 --> 00:37:20,080
Speaker 5: we're talking about tariffs. You said, the big questions are

731
00:37:20,160 --> 00:37:22,640
Speaker 5: what do other countries? What are they going to do?

732
00:37:23,000 --> 00:37:26,480
Speaker 5: It appears that people aren't going to take this lying down.

733
00:37:26,520 --> 00:37:30,480
Speaker 5: There's gonna be some retaliatory tariffs here of substance. What

734
00:37:30,520 --> 00:37:31,080
Speaker 5: does that mean?

735
00:37:31,640 --> 00:37:31,799
Speaker 3: Right?

736
00:37:31,800 --> 00:37:35,879
Speaker 11: Well, that's yeah, that's right. Obviously we've just seen China responding.

737
00:37:36,239 --> 00:37:38,239
Speaker 11: And actually I had a conversation with a guest you

738
00:37:38,280 --> 00:37:41,319
Speaker 11: had on yesterday. We chatted last night, which is my

739
00:37:41,440 --> 00:37:44,719
Speaker 11: colleague Doug Owin, and his view was actually that two

740
00:37:44,760 --> 00:37:47,880
Speaker 11: weeks ago, his view was that everywhere would have actually

741
00:37:47,920 --> 00:37:51,640
Speaker 11: responded like for like, and his view is this is

742
00:37:51,680 --> 00:37:52,719
Speaker 11: also chaotic.

743
00:37:53,200 --> 00:37:54,479
Speaker 8: That maybe what you'll see.

744
00:37:54,520 --> 00:37:58,279
Speaker 11: I mean, obviously China's responded, but maybe some countries will

745
00:37:58,280 --> 00:37:58,960
Speaker 11: actually sit.

746
00:37:58,880 --> 00:38:01,279
Speaker 8: And wait and watch look rather than.

747
00:38:01,239 --> 00:38:05,600
Speaker 11: Immediately respond, perhaps because Trump will step back. Perhaps we'll

748
00:38:05,640 --> 00:38:07,960
Speaker 11: see more evidence coming. So I think the answer is

749
00:38:08,320 --> 00:38:12,160
Speaker 11: potentially you'll see many more places responding, but maybe for

750
00:38:12,280 --> 00:38:14,560
Speaker 11: now all the sensible thing. You go back to our

751
00:38:14,600 --> 00:38:18,600
Speaker 11: conversation a minute ago, abouts you know what's coming. Where

752
00:38:18,640 --> 00:38:21,160
Speaker 11: are we? It might be that other place. I think

753
00:38:21,200 --> 00:38:24,000
Speaker 11: the UK's example, Japan's an example. They're going to sit

754
00:38:24,040 --> 00:38:26,879
Speaker 11: and take a breath and think in the sense that, Okay,

755
00:38:26,920 --> 00:38:28,520
Speaker 11: if you did it, you don't have to do it

756
00:38:28,560 --> 00:38:31,600
Speaker 11: this week. China's done it, and that's a really big deal.

757
00:38:31,680 --> 00:38:35,720
Speaker 11: But you know, this is really huge amounts of uncertainty,

758
00:38:35,880 --> 00:38:38,400
Speaker 11: and think about what the consequences of that are. Firms

759
00:38:38,400 --> 00:38:40,400
Speaker 11: aren't going to invest us top building plans in the

760
00:38:40,520 --> 00:38:43,600
Speaker 11: United States because of the chaos. Central banks don't know

761
00:38:43,640 --> 00:38:46,160
Speaker 11: what to do because there's great uncertainty. So I think

762
00:38:46,200 --> 00:38:48,560
Speaker 11: we'll see a little bit of let's sit back and

763
00:38:48,640 --> 00:38:51,799
Speaker 11: wait and decide what's the most appropriate. But that's Doug

764
00:38:51,840 --> 00:38:53,840
Speaker 11: Owen's view, and I think it's mine.

765
00:38:53,640 --> 00:38:55,120
Speaker 8: Too, Professor.

766
00:38:55,520 --> 00:38:57,960
Speaker 5: I think we're starting to hear and this coming earning

767
00:38:58,000 --> 00:38:59,839
Speaker 5: cycle is going to be very interesting to see which

768
00:38:59,840 --> 00:39:04,719
Speaker 5: companies provide guidance in which companies withhold right guidance here,

769
00:39:05,200 --> 00:39:08,200
Speaker 5: because it feels like not just consumers, but companies are

770
00:39:08,200 --> 00:39:10,240
Speaker 5: also sitting on their hands and waiting.

771
00:39:11,400 --> 00:39:13,800
Speaker 11: Well they are, I mean, I was, I was actually

772
00:39:13,800 --> 00:39:16,359
Speaker 11: just the thing came across my terminal, just a minute

773
00:39:16,360 --> 00:39:22,080
Speaker 11: ago from the UK Institute of Directors, and they quite interesting.

774
00:39:22,120 --> 00:39:25,200
Speaker 8: They immediately did a survey of six hundred odd members

775
00:39:25,200 --> 00:39:25,520
Speaker 8: of the.

776
00:39:25,400 --> 00:39:29,040
Speaker 11: Institute of Directors and seventy percent of them say that

777
00:39:29,120 --> 00:39:31,880
Speaker 11: they expect their profits are going to fall as a result.

778
00:39:32,400 --> 00:39:34,560
Speaker 11: So obviously you know firms are going to give a

779
00:39:34,680 --> 00:39:37,640
Speaker 11: different vidy. I mean, if seventy percent of them, I

780
00:39:37,719 --> 00:39:39,960
Speaker 11: think this is going to have a profit effect on them,

781
00:39:40,040 --> 00:39:41,600
Speaker 11: They're going to sit and wait and watch. But you

782
00:39:41,680 --> 00:39:44,400
Speaker 11: might imagine they're going to impact employment, it's going to

783
00:39:44,440 --> 00:39:48,920
Speaker 11: impact investment. And I'm just going a couple of quick

784
00:39:48,960 --> 00:39:51,440
Speaker 11: things just so listeners understand. Think are the basic I

785
00:39:51,440 --> 00:39:55,080
Speaker 11: mean blandram Erwin teach intro macro, what do we teach?

786
00:39:55,400 --> 00:39:56,879
Speaker 8: National income is.

787
00:39:56,880 --> 00:40:00,280
Speaker 11: Decided by C plus I plus G right consumption plus

788
00:40:00,280 --> 00:40:03,400
Speaker 11: investment plus government. Well, the situation we're in now, consumer

789
00:40:03,480 --> 00:40:08,319
Speaker 11: spending's falling and sentiments declining, investment intentions of declining, and

790
00:40:08,360 --> 00:40:11,440
Speaker 11: the government's cutting spending. So how do we get anything

791
00:40:11,480 --> 00:40:15,480
Speaker 11: other declines in GDP? The only issue I think is

792
00:40:15,520 --> 00:40:17,359
Speaker 11: how big of those declines going to be. Are they

793
00:40:17,520 --> 00:40:20,520
Speaker 11: just going to reduce the expected to grow from to

794
00:40:20,560 --> 00:40:22,279
Speaker 11: one or is it going to go negative, and I

795
00:40:22,280 --> 00:40:24,560
Speaker 11: think that's where we are. Hard to predict anything, but

796
00:40:24,600 --> 00:40:27,319
Speaker 11: it all looks like the wrists of to the downside, right,

797
00:40:27,360 --> 00:40:30,000
Speaker 11: and this government has to calm nerves.

798
00:40:30,239 --> 00:40:33,560
Speaker 2: Okay, well, the folks of Vignette here, so Blancheflower calls

799
00:40:33,600 --> 00:40:38,479
Speaker 2: me up. I'm lecturing the intro Macro at Dartmouth. There's

800
00:40:38,480 --> 00:40:40,200
Speaker 2: a bunch of marketing marks going.

801
00:40:40,080 --> 00:40:41,680
Speaker 3: Who's the cloud the bowtie?

802
00:40:42,080 --> 00:40:44,480
Speaker 2: And I look down in the aisle and Dug Irwin

803
00:40:44,640 --> 00:40:47,879
Speaker 2: staring at me, sitting on the floor of the isles,

804
00:40:48,160 --> 00:40:51,320
Speaker 2: and I've got an ex philosophical Okay, David, you've.

805
00:40:51,120 --> 00:40:53,640
Speaker 3: Been through this with the Bank of England. It's about

806
00:40:53,719 --> 00:40:56,560
Speaker 3: confidence and trust. I mentioned this yesterday.

807
00:40:56,920 --> 00:41:00,200
Speaker 2: How close are we to I'm going to call as

808
00:41:00,200 --> 00:41:07,400
Speaker 2: a generalization a clement aptly disinflationary United Kingdom analog.

809
00:41:08,600 --> 00:41:11,839
Speaker 8: Well, I don't know the answer to that.

810
00:41:11,920 --> 00:41:14,360
Speaker 11: I mean, think about I think a good analogy I

811
00:41:14,360 --> 00:41:16,120
Speaker 11: thought you would ask something like that, And a good

812
00:41:16,120 --> 00:41:19,319
Speaker 11: analogy I think now is actually to look back at

813
00:41:19,360 --> 00:41:23,440
Speaker 11: what Ben Bernanke just did. Yankee Ben Bernanke went to

814
00:41:23,480 --> 00:41:25,080
Speaker 11: the UK to the Bank of Being in the said

815
00:41:25,160 --> 00:41:28,640
Speaker 11: let's think about how you modeled it and actually today

816
00:41:28,760 --> 00:41:31,359
Speaker 11: these models essentially are thrown out of the window. And

817
00:41:31,400 --> 00:41:33,279
Speaker 11: what you're going to have to do, and firms are

818
00:41:33,280 --> 00:41:34,680
Speaker 11: going to do it, and central banks are going to

819
00:41:34,760 --> 00:41:37,160
Speaker 11: do it. They're going to set up scenarios tom They're

820
00:41:37,160 --> 00:41:42,200
Speaker 11: going to have scenario one, everyone retaliates, scenario two, Trump

821
00:41:42,280 --> 00:41:44,520
Speaker 11: backs off, and you're going to sit and try and

822
00:41:44,600 --> 00:41:47,439
Speaker 11: map out those scenarios and then try and think which

823
00:41:47,440 --> 00:41:49,799
Speaker 11: of them is the most like Because you can't run

824
00:41:49,800 --> 00:41:53,040
Speaker 11: a forecasting model, we have no prior data to look

825
00:41:53,120 --> 00:41:56,120
Speaker 11: at this. So I think I do think the advice

826
00:41:56,160 --> 00:41:58,680
Speaker 11: that I would give people is, you know, wait what,

827
00:41:59,160 --> 00:42:01,879
Speaker 11: let's see where we Let's see when this thing bottoms out.

828
00:42:02,080 --> 00:42:04,040
Speaker 11: Think about if people say you're going to buy on,

829
00:42:04,400 --> 00:42:06,680
Speaker 11: buy on the decline, buy at the bottom, Well, we

830
00:42:06,719 --> 00:42:08,920
Speaker 11: don't know where the bottom is. So I think I

831
00:42:08,920 --> 00:42:12,359
Speaker 11: think that's the logic, and I think we're seeing that.

832
00:42:12,440 --> 00:42:14,200
Speaker 11: I mean, you know, you guys are great at tracking

833
00:42:14,200 --> 00:42:16,960
Speaker 11: what's going on. You know, a falling night, you just

834
00:42:16,960 --> 00:42:18,920
Speaker 11: wait for it the fall, And I think that's where

835
00:42:18,960 --> 00:42:19,279
Speaker 11: we are.

836
00:42:19,520 --> 00:42:21,759
Speaker 2: David Blanchelard, thank you so much for joining us the

837
00:42:21,800 --> 00:42:24,960
Speaker 2: honor evading Irwin and Black Blanche back to Bath in

838
00:42:25,040 --> 00:42:32,520
Speaker 2: this crisis really helps. He is at Dartmouth College.

839
00:42:34,480 --> 00:42:38,400
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

840
00:42:38,440 --> 00:42:41,440
Speaker 1: starting at seven am Eastern on Apple, Corplay and Android

841
00:42:41,480 --> 00:42:44,439
Speaker 1: Otto with the Bloomberg Business app. You can also watch

842
00:42:44,560 --> 00:42:47,520
Speaker 1: us live every weekday on YouTube and always on the

843
00:42:47,520 --> 00:42:48,600
Speaker 1: Bloomberg terminal.

844
00:42:48,800 --> 00:42:52,279
Speaker 2: Gouda mccunne joins us now with Yale with all of

845
00:42:52,320 --> 00:42:56,719
Speaker 2: his work is wonderful book picking presidents and this weekend

846
00:42:56,960 --> 00:42:59,360
Speaker 2: we need an applelogue or I need a chapter seven

847
00:42:59,440 --> 00:43:03,239
Speaker 2: year where do we go from here? As the conclusion professor,

848
00:43:03,760 --> 00:43:07,200
Speaker 2: where do we go from here? After Rose Garden festivities

849
00:43:07,520 --> 00:43:09,320
Speaker 2: in the last forty eight hours.

850
00:43:11,040 --> 00:43:14,359
Speaker 12: This is probably the single largest self inflicted economic foreign

851
00:43:14,560 --> 00:43:17,920
Speaker 12: economic policy failure of any of our lifetimes. Just no

852
00:43:17,960 --> 00:43:22,680
Speaker 12: matter how far back you go, so we're in uncharted territory.

853
00:43:22,719 --> 00:43:25,320
Speaker 12: The thing that really strikes me is to an extent

854
00:43:25,360 --> 00:43:27,480
Speaker 12: that we have not seen before with Trump, even in

855
00:43:27,520 --> 00:43:31,080
Speaker 12: the first Trump administration, he just seems to be immune.

856
00:43:31,120 --> 00:43:32,959
Speaker 12: He's not listening to other people, right, He's not listening

857
00:43:33,000 --> 00:43:34,880
Speaker 12: to the feedback from the markets. He just seems to

858
00:43:34,920 --> 00:43:37,000
Speaker 12: be immune to that. We can speculate as to what

859
00:43:37,040 --> 00:43:39,520
Speaker 12: the reasons for that might be, but my guess is

860
00:43:39,800 --> 00:43:41,680
Speaker 12: it's going to take him longer to back off the

861
00:43:41,719 --> 00:43:44,600
Speaker 12: tariffs than people expect, and people who are anticipating the

862
00:43:44,600 --> 00:43:46,120
Speaker 12: same sort of like we're doing this, we're not doing

863
00:43:46,200 --> 00:43:49,200
Speaker 12: this back and forth. I wouldn't want to take that bet.

864
00:43:49,600 --> 00:43:52,759
Speaker 5: Even before the tariffs, we've had this market kind of

865
00:43:52,800 --> 00:43:55,759
Speaker 5: reflect on some of the economic policies here. If you

866
00:43:55,840 --> 00:43:57,879
Speaker 5: just look at the stock market performance here to date

867
00:43:57,920 --> 00:44:00,320
Speaker 5: in the US in the first quarter was dramatically blow

868
00:44:00,360 --> 00:44:02,880
Speaker 5: the rest of the world, and that rarely, if ever, happens.

869
00:44:03,400 --> 00:44:05,840
Speaker 5: Are you surprised so the market has spoken, Are you

870
00:44:05,880 --> 00:44:09,720
Speaker 5: surprised that members of Congress have not spoken about tariffs

871
00:44:09,800 --> 00:44:11,000
Speaker 5: or perhaps some other policies.

872
00:44:11,640 --> 00:44:14,719
Speaker 12: So I'm not surprised yet. I will be surprised if

873
00:44:14,719 --> 00:44:17,360
Speaker 12: this keeps going for a few months. Right now, the

874
00:44:17,400 --> 00:44:21,120
Speaker 12: Republican Party is still completely unified behind Trump, and Republican

875
00:44:21,160 --> 00:44:24,120
Speaker 12: representatives in the House and Senate care most about that.

876
00:44:24,760 --> 00:44:27,239
Speaker 12: But this is going to start to hit and I

877
00:44:27,280 --> 00:44:30,080
Speaker 12: would think the biggest way in which the pressure will

878
00:44:30,120 --> 00:44:33,280
Speaker 12: start to ramp up is they're working on these tax cuts.

879
00:44:33,320 --> 00:44:36,200
Speaker 12: They want to do massive tax cuts again, despite you know,

880
00:44:36,280 --> 00:44:39,200
Speaker 12: obviously the deficit consequences of that, and those tax cuts

881
00:44:39,200 --> 00:44:43,520
Speaker 12: are focused again disproportionately on the wealthy. I think Democrats

882
00:44:43,600 --> 00:44:45,960
Speaker 12: are kind of going around saying, hey, if you guys

883
00:44:45,960 --> 00:44:49,880
Speaker 12: want to erase, do the largest tax increase in human

884
00:44:50,120 --> 00:44:53,239
Speaker 12: history targeted primarily on the poor and middle class in

885
00:44:53,320 --> 00:44:56,360
Speaker 12: order to pay for tax cuts for the wealthy. The

886
00:44:56,400 --> 00:44:59,279
Speaker 12: politics of that look pretty bad to me, even if

887
00:44:59,280 --> 00:45:01,520
Speaker 12: you're a Democrat, a Republican in a red state.

888
00:45:01,960 --> 00:45:03,800
Speaker 2: Up the script. We can do this with god. A mccundam.

889
00:45:03,840 --> 00:45:06,040
Speaker 2: Now you're coming from Boston. For those of you on radio,

890
00:45:06,120 --> 00:45:09,440
Speaker 2: we've got the gorgeous backdrop. It looks like a Spielberg movie.

891
00:45:09,480 --> 00:45:12,439
Speaker 2: Said of Beacon Hill, the Charles River over to two

892
00:45:12,560 --> 00:45:17,399
Speaker 2: universities of suspectability, Professor mccundac, I mean, as simple as

893
00:45:17,440 --> 00:45:21,120
Speaker 2: I can, President Trump is against the people dining at

894
00:45:21,200 --> 00:45:25,360
Speaker 2: Number nine Park on Beacon Hill. They're against the fancy

895
00:45:25,400 --> 00:45:28,839
Speaker 2: people of Boston and coast to coast as well. You

896
00:45:28,880 --> 00:45:31,439
Speaker 2: say the Republicans are going to stay with him, John

897
00:45:31,480 --> 00:45:35,160
Speaker 2: Burn Murdoch in the Ft says they're already walking away.

898
00:45:35,400 --> 00:45:39,799
Speaker 2: Do you anticipate or is there a historical analog where

899
00:45:39,840 --> 00:45:42,640
Speaker 2: the Republicans walk away from Donald Trump.

900
00:45:44,680 --> 00:45:48,680
Speaker 12: So there's a possibility. So what you saw Andrew Johnson

901
00:45:49,200 --> 00:45:51,840
Speaker 12: and the eighteen sixties where the Republican Party turned completely

902
00:45:51,920 --> 00:45:54,000
Speaker 12: on him and it was the Democrats who were his

903
00:45:54,040 --> 00:45:58,080
Speaker 12: base of support. But for Trump, it is impossible to

904
00:45:58,160 --> 00:46:00,800
Speaker 12: overstate the charismatic hole that Donald Trump has on the

905
00:46:00,840 --> 00:46:01,640
Speaker 12: Republican base.

906
00:46:02,040 --> 00:46:02,239
Speaker 3: Right.

907
00:46:02,680 --> 00:46:05,200
Speaker 12: For whatever criticisms you might make of Trump, his skill

908
00:46:05,280 --> 00:46:09,120
Speaker 12: at crafting that is just unparalleled in American history. And

909
00:46:09,400 --> 00:46:12,759
Speaker 12: if you're a Republican Conasonan whose basic concern is getting reelected,

910
00:46:12,800 --> 00:46:14,279
Speaker 12: that's going to get really hard.

911
00:46:14,760 --> 00:46:16,880
Speaker 8: That being said, maybe.

912
00:46:16,680 --> 00:46:18,520
Speaker 12: I'm being optimistic here, but I think there is a

913
00:46:18,520 --> 00:46:21,000
Speaker 12: core of Republicans who are looking at the damage, and

914
00:46:21,239 --> 00:46:23,200
Speaker 12: as much in the economic damage, they're looking at the

915
00:46:23,320 --> 00:46:27,280
Speaker 12: catastrophic collapse in our physician in the world where essentially

916
00:46:27,320 --> 00:46:29,200
Speaker 12: all of our allies are saying you know, I mean

917
00:46:29,360 --> 00:46:31,840
Speaker 12: not behind the scenes, right, they're saying on the record.

918
00:46:31,880 --> 00:46:34,720
Speaker 12: They're saying things like you're better off allying with China

919
00:46:34,719 --> 00:46:37,359
Speaker 12: than the United States because at least the Chinese are predictable.

920
00:46:37,920 --> 00:46:38,080
Speaker 10: Right.

921
00:46:38,520 --> 00:46:40,440
Speaker 12: That is also got a bit pressure on at least

922
00:46:40,480 --> 00:46:43,200
Speaker 12: those Republicans who care a lot about foreign policy, and

923
00:46:43,560 --> 00:46:46,600
Speaker 12: that's just something that we've never seen before, and the

924
00:46:46,640 --> 00:46:49,239
Speaker 12: consequences of it are going to keep rippling out for

925
00:46:49,800 --> 00:46:53,160
Speaker 12: years and decades. If Trump vanished tomorrow, we would still

926
00:46:53,160 --> 00:46:54,440
Speaker 12: be dealing with this for a generation.

927
00:46:56,040 --> 00:46:58,479
Speaker 2: That's one of the most amazing statements of the week.

928
00:46:59,080 --> 00:47:02,720
Speaker 2: You're saying, Profet sir, if President, if we had President Advance, whatever,

929
00:47:03,520 --> 00:47:07,600
Speaker 2: if President Trump removed tomorrow, this continues.

930
00:47:08,760 --> 00:47:12,479
Speaker 12: So I mean, I'm not saying the economic policy might change,

931
00:47:12,480 --> 00:47:15,759
Speaker 12: but the foreign policy effects will continue. So let's put

932
00:47:15,760 --> 00:47:19,359
Speaker 12: this differently. Right, So, I used to advise the Chief

933
00:47:19,360 --> 00:47:21,640
Speaker 12: of Naval Operations and you know, the senior military, and

934
00:47:21,719 --> 00:47:25,160
Speaker 12: so right now there is the Polish or the Japanese

935
00:47:25,239 --> 00:47:28,680
Speaker 12: version of me who's going and advising their Ministry Defense

936
00:47:28,719 --> 00:47:31,600
Speaker 12: and saying, we have wagered the existence of our country

937
00:47:31,640 --> 00:47:34,200
Speaker 12: on the American nuclear umbrella for you know, quite a

938
00:47:34,200 --> 00:47:36,640
Speaker 12: long in the Japanese cases, nineteen forty five in the

939
00:47:36,640 --> 00:47:39,400
Speaker 12: poll since the end of the Cold War. And clearly

940
00:47:39,480 --> 00:47:43,400
Speaker 12: that is not possible because even if Trump weren't here,

941
00:47:42,320 --> 00:47:46,440
Speaker 12: the Americans clearly like to elect people like this. So

942
00:47:46,920 --> 00:47:49,120
Speaker 12: we need the nuclear weapons of our own because it

943
00:47:49,120 --> 00:47:52,560
Speaker 12: would be irresponsible not to have them, and that's not speculation.

944
00:47:52,760 --> 00:47:55,759
Speaker 12: The President of Poland just said Poland should probably look

945
00:47:55,800 --> 00:47:58,880
Speaker 12: at acquiring nuclear weapons because the Americans are no longer reliable.

946
00:47:59,360 --> 00:48:02,120
Speaker 12: The consequence of that are going to be kept failing forever.

947
00:48:02,200 --> 00:48:05,799
Speaker 12: Because if I were Japanese advising the Japanese Ministry Defense,

948
00:48:05,840 --> 00:48:08,759
Speaker 12: I'd say it is irresponsible not to do this.

949
00:48:09,760 --> 00:48:14,399
Speaker 5: So again, I guess the question is, this is kind

950
00:48:14,440 --> 00:48:17,480
Speaker 5: of where we are again. Do you expect it at

951
00:48:17,520 --> 00:48:20,600
Speaker 5: any point pushback from some members of Congress, because it

952
00:48:20,640 --> 00:48:26,800
Speaker 5: does not appear that there's anything within the administration to check, if.

953
00:48:26,640 --> 00:48:30,000
Speaker 12: You will, No, And I think the thing that might

954
00:48:30,000 --> 00:48:33,279
Speaker 12: have started to break it was the Tuesday elections where

955
00:48:33,560 --> 00:48:37,120
Speaker 12: the Republicans you know, loost in Wisconsin and we're closer

956
00:48:37,160 --> 00:48:40,080
Speaker 12: than they should have been in Florida, despite the massive

957
00:48:40,080 --> 00:48:43,480
Speaker 12: intervention of Elon Muskin Wisconsin, I mean sort of. The

958
00:48:43,560 --> 00:48:45,800
Speaker 12: joke I was hearing was that the inflation has gotten

959
00:48:45,800 --> 00:48:47,719
Speaker 12: so bad that the wealthiest man in America can't buy

960
00:48:47,800 --> 00:48:51,120
Speaker 12: some a state Supreme Court seat anymore. And a lot

961
00:48:51,160 --> 00:48:53,560
Speaker 12: of Republicans were being held in check by the fear

962
00:48:53,680 --> 00:48:56,799
Speaker 12: essentially that Musk in particular would pay for primaries against them.

963
00:48:57,320 --> 00:48:59,920
Speaker 12: If he is no longer able or willing to do that,

964
00:49:00,200 --> 00:49:03,239
Speaker 12: or if his effectiveness is just decreased, that might free

965
00:49:03,320 --> 00:49:05,279
Speaker 12: up some space to maneuver. But I wouldn't expect it

966
00:49:05,280 --> 00:49:08,240
Speaker 12: to happen fast. The bond here is really tight.

967
00:49:09,000 --> 00:49:12,040
Speaker 2: I mean, I look forward here and let's just simplistically

968
00:49:12,080 --> 00:49:14,600
Speaker 2: say this, and I said this this morning post, I'm

969
00:49:14,640 --> 00:49:19,240
Speaker 2: repeating myself at the Rose Garden. Did President Trump lose

970
00:49:19,280 --> 00:49:19,760
Speaker 2: the House?

971
00:49:22,520 --> 00:49:25,640
Speaker 12: So my guess is that just simple regression to the

972
00:49:25,680 --> 00:49:28,120
Speaker 12: mean And the fact that the two bases of the

973
00:49:28,120 --> 00:49:31,480
Speaker 12: parties have switched so Democrats now have high propensity to

974
00:49:31,560 --> 00:49:34,440
Speaker 12: vote voters and Republicans have low propensity to vote probably

975
00:49:34,440 --> 00:49:36,480
Speaker 12: meant that Trump lost the House the day he won

976
00:49:36,480 --> 00:49:39,719
Speaker 12: the November election. The question now is is this going

977
00:49:39,760 --> 00:49:41,879
Speaker 12: to be so bad that the Democrats will be able

978
00:49:41,920 --> 00:49:45,960
Speaker 12: to keep the House for multiple cycles. The last time that,

979
00:49:46,000 --> 00:49:48,120
Speaker 12: as you know, you're hearing Republicans say this, you know,

980
00:49:48,280 --> 00:49:50,440
Speaker 12: not for attribution but on the record, but where they're

981
00:49:50,440 --> 00:49:52,920
Speaker 12: actually quoted. The last time we saw tariffs like this,

982
00:49:53,040 --> 00:49:57,360
Speaker 12: Republicans lost the House for sixty years. I don't anticipate

983
00:49:57,400 --> 00:50:00,000
Speaker 12: that happening. But the politics of this, like it's particular,

984
00:50:00,080 --> 00:50:02,600
Speaker 12: it will be striking right. The people who will suffer most,

985
00:50:02,719 --> 00:50:05,759
Speaker 12: both from the tariffs themselves and from the responses to

986
00:50:05,760 --> 00:50:08,400
Speaker 12: the tariffs by other countries, are Republican voters.

987
00:50:08,800 --> 00:50:11,640
Speaker 2: Professor Dinner tonight at Number nine Park, Thank you so much.

988
00:50:11,680 --> 00:50:14,720
Speaker 2: Look for Lakanda with us from Boston.

989
00:50:14,760 --> 00:50:16,360
Speaker 3: Of course's affiliation Modio.

990
00:50:16,800 --> 00:50:20,680
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

991
00:50:20,719 --> 00:50:23,760
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

992
00:50:23,760 --> 00:50:26,800
Speaker 1: Auto with the Bloomberg Business app. You can also listen

993
00:50:26,880 --> 00:50:30,120
Speaker 1: live on Amazon Alexa from our flagship New York station.

994
00:50:30,680 --> 00:50:33,360
Speaker 1: Just say Alexa play Bloomberg eleven thirty.

995
00:50:33,760 --> 00:50:35,720
Speaker 3: We need to break the newspapers.

996
00:50:35,960 --> 00:50:37,320
Speaker 13: Okay, well I'm not going to give it to you

997
00:50:37,360 --> 00:50:40,920
Speaker 13: because we're talking tariffs. I know, just when you wanted.

998
00:50:41,239 --> 00:50:43,399
Speaker 13: This one's in the journal. So it's an interesting look

999
00:50:43,400 --> 00:50:45,799
Speaker 13: because it's talking about how President Trump's tariffs on China

1000
00:50:45,840 --> 00:50:49,040
Speaker 13: threatened to create this new problem for global economy. They

1001
00:50:49,120 --> 00:50:52,000
Speaker 13: talked about this four hundred billion dollar surge of Chinese

1002
00:50:52,040 --> 00:50:54,680
Speaker 13: goods that are now going to be looking for new markets.

1003
00:50:54,719 --> 00:50:57,600
Speaker 13: And the problem is that the global markets already filled

1004
00:50:57,600 --> 00:50:59,799
Speaker 13: with these China made goods. So then you have the

1005
00:51:00,040 --> 00:51:02,200
Speaker 13: domino effect, and that's what it talks about about other

1006
00:51:02,280 --> 00:51:05,640
Speaker 13: major exporters like Vietnam, South Korea, Japan, they could see

1007
00:51:05,640 --> 00:51:08,840
Speaker 13: those similar issues. And economics are saying how the trade

1008
00:51:08,840 --> 00:51:11,600
Speaker 13: wars could escalate because of this, and one of them

1009
00:51:11,640 --> 00:51:14,520
Speaker 13: actually saying that the real fireworks are yet to come.

1010
00:51:14,640 --> 00:51:17,439
Speaker 13: So they're saying that this whole domino effect could start coming.

1011
00:51:17,960 --> 00:51:20,480
Speaker 13: Chinese imports slap with that thirty four percent duty. But

1012
00:51:20,560 --> 00:51:22,640
Speaker 13: this morning we heard also that China is hitting back

1013
00:51:22,680 --> 00:51:26,399
Speaker 13: saying it's going to impose a thirty percent imports from

1014
00:51:26,400 --> 00:51:28,960
Speaker 13: the US soybets among.

1015
00:51:28,920 --> 00:51:33,400
Speaker 5: Yeah, so farmers, Okay, I get from mister Trump. Then

1016
00:51:33,440 --> 00:51:35,440
Speaker 5: look at the direct.

1017
00:51:34,680 --> 00:51:36,600
Speaker 3: A check for mister Trump. I don't get it. I

1018
00:51:36,600 --> 00:51:37,040
Speaker 3: don't get it.

1019
00:51:37,560 --> 00:51:40,239
Speaker 2: Anybody in the control room get it. Can you get

1020
00:51:40,280 --> 00:51:41,480
Speaker 2: the soybetan dynamics?

1021
00:51:41,560 --> 00:51:43,120
Speaker 13: It does not ken.

1022
00:51:42,960 --> 00:51:45,759
Speaker 3: Doesn't need to doesn't tofu.

1023
00:51:45,600 --> 00:51:49,120
Speaker 13: Next, Okay, so we're sticking with towers. Were going to

1024
00:51:49,360 --> 00:51:51,200
Speaker 13: the grocery aisle right.

1025
00:51:53,600 --> 00:51:54,160
Speaker 8: Here we go.

1026
00:51:54,560 --> 00:51:57,080
Speaker 13: What's going to cost you more at the grocery store? Okay?

1027
00:51:57,120 --> 00:51:59,480
Speaker 13: Because of this all right, parts of the store where

1028
00:51:59,480 --> 00:52:02,320
Speaker 13: the infant has to move fast, that's what's going to

1029
00:52:02,400 --> 00:52:05,279
Speaker 13: hit the hardest. Like the prototyle. You have bananas coming

1030
00:52:05,280 --> 00:52:08,719
Speaker 13: from Gus, right, grapes coming from Peru. Okay, those are

1031
00:52:08,760 --> 00:52:11,239
Speaker 13: going to cost you more. Sugar coffee too. On top

1032
00:52:11,280 --> 00:52:13,719
Speaker 13: of it, seafood, you know you can't get the nice

1033
00:52:13,719 --> 00:52:15,719
Speaker 13: fresh seafood is going to cost you a little bit more.

1034
00:52:15,760 --> 00:52:17,960
Speaker 13: Now they're saying that tariffs are going to drive up

1035
00:52:17,960 --> 00:52:21,600
Speaker 13: the cost even for Paul's favorite, those private label products,

1036
00:52:21,600 --> 00:52:23,719
Speaker 13: those cheaper ones are even going to start to come up.

1037
00:52:24,520 --> 00:52:27,600
Speaker 13: And the opportunity for price gouging they also talked about,

1038
00:52:27,640 --> 00:52:29,680
Speaker 13: which was interesting, is that they think that's going to

1039
00:52:29,719 --> 00:52:32,279
Speaker 13: start to get higher too as people start to take

1040
00:52:32,320 --> 00:52:33,480
Speaker 13: advantage of it a little bit.

1041
00:52:34,160 --> 00:52:36,440
Speaker 3: Are they going to eat the tariff in their margin?

1042
00:52:36,560 --> 00:52:40,960
Speaker 5: That's of course I don't see, And I remembers companies maybe, yeah,

1043
00:52:41,040 --> 00:52:43,680
Speaker 5: I just I remember back from the pandemic. I mean,

1044
00:52:43,840 --> 00:52:46,720
Speaker 5: we heard most of these companies, consumer packaging good companies

1045
00:52:46,719 --> 00:52:49,239
Speaker 5: said that they were able to pass along most of

1046
00:52:49,280 --> 00:52:51,440
Speaker 5: the pricing creases to consumer and we certainly felt that

1047
00:52:51,440 --> 00:52:55,520
Speaker 5: out that supermarket as consumers. So whether they can do

1048
00:52:55,560 --> 00:52:59,319
Speaker 5: it again, I don't know, but boy, it's I don't

1049
00:52:59,360 --> 00:52:59,560
Speaker 5: know this.

1050
00:53:00,719 --> 00:53:03,080
Speaker 2: You're going to go from three shopping cards to seven

1051
00:53:03,160 --> 00:53:05,240
Speaker 2: shopping cards this week in at cost.

1052
00:53:05,800 --> 00:53:06,920
Speaker 3: I'm gonna start to purge.

1053
00:53:07,840 --> 00:53:10,600
Speaker 13: I'm gonna have to click my cart and like I've

1054
00:53:10,600 --> 00:53:12,320
Speaker 13: been holding onto the card, I got it empty it

1055
00:53:12,400 --> 00:53:13,000
Speaker 13: now one more?

1056
00:53:13,040 --> 00:53:13,400
Speaker 3: What do you have?

1057
00:53:13,640 --> 00:53:13,920
Speaker 7: Okay?

1058
00:53:14,280 --> 00:53:16,200
Speaker 13: This was from the Boston Globe. It's about the cost

1059
00:53:16,280 --> 00:53:19,279
Speaker 13: of education getting more expensive, grocerries getting expensive, course of

1060
00:53:19,360 --> 00:53:22,400
Speaker 13: education getting expensive. New England, right, you know it has

1061
00:53:22,440 --> 00:53:25,280
Speaker 13: some of the most prestigious universities, also the most expective

1062
00:53:25,600 --> 00:53:29,359
Speaker 13: you have Wellesley College. It's overall annual costs for undergraduates

1063
00:53:29,360 --> 00:53:34,160
Speaker 13: are passing one hundred thousand dollars in September. Crazy, just

1064
00:53:34,200 --> 00:53:36,440
Speaker 13: over sixty nine thousand of that is tuition, so you

1065
00:53:36,480 --> 00:53:39,799
Speaker 13: have like Roome and Board in their textbooks, transportation, things

1066
00:53:39,840 --> 00:53:42,640
Speaker 13: like that. But it sounds like other private schools they're

1067
00:53:42,760 --> 00:53:45,040
Speaker 13: really not far behind, because if you look at Harvard,

1068
00:53:45,520 --> 00:53:48,760
Speaker 13: Boston College, Tufts University, they're going to be well above

1069
00:53:48,840 --> 00:53:51,560
Speaker 13: ninety thousand next year. So it's just this thought of

1070
00:53:51,640 --> 00:53:54,960
Speaker 13: the prices of colleges keep on going from most schools

1071
00:53:54,960 --> 00:53:57,120
Speaker 13: in New England to actually total cost rose anywhere from

1072
00:53:57,120 --> 00:53:58,279
Speaker 13: three to five percent last year.

1073
00:53:58,600 --> 00:53:59,800
Speaker 3: That's one can afford.

1074
00:53:59,840 --> 00:54:01,719
Speaker 2: It is the picture for the Red Sox. I just

1075
00:54:01,760 --> 00:54:05,319
Speaker 2: signed for a million zillion dollars. What's interesting is a

1076
00:54:05,360 --> 00:54:09,000
Speaker 2: single sentence in that Boston Globe article that they see

1077
00:54:09,080 --> 00:54:10,560
Speaker 2: no lessening of their cale.

1078
00:54:10,920 --> 00:54:13,040
Speaker 13: The incoming class is going to be the largest ever.

1079
00:54:13,480 --> 00:54:15,760
Speaker 13: So people are still enrolling.

1080
00:54:15,560 --> 00:54:18,319
Speaker 5: Despite again having been at the board level of a

1081
00:54:18,360 --> 00:54:23,000
Speaker 5: couple of places. The cost structure for higher education is

1082
00:54:23,040 --> 00:54:24,440
Speaker 5: simply broken.

1083
00:54:24,520 --> 00:54:24,799
Speaker 1: It is.

1084
00:54:24,840 --> 00:54:28,200
Speaker 5: It is totally does not work. You have to cut

1085
00:54:28,200 --> 00:54:32,239
Speaker 5: it in f which you can't do because but that's

1086
00:54:32,320 --> 00:54:33,160
Speaker 5: what has to happen.

1087
00:54:33,560 --> 00:54:35,200
Speaker 2: We'll have to see and we'll have a much more

1088
00:54:35,239 --> 00:54:38,560
Speaker 2: on this thanks to our education team, David Gura doing

1089
00:54:38,600 --> 00:54:42,960
Speaker 2: some good work there with Janet Lauren recently Lisa Mateo

1090
00:54:43,719 --> 00:54:44,840
Speaker 2: with the newspapers.

1091
00:54:45,200 --> 00:54:50,040
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

1092
00:54:50,160 --> 00:54:54,440
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

1093
00:54:54,600 --> 00:54:57,840
Speaker 1: seven to ten am Easter and on Bloomberg dot Com,

1094
00:54:57,960 --> 00:55:01,759
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

1095
00:55:02,080 --> 00:55:05,160
Speaker 1: You can also watch us live every weekday on YouTube

1096
00:55:05,480 --> 00:55:07,480
Speaker 1: and always on the Bloomberg terminal